Authority increased supervision over local investments -- enabling it to give more protection to local shareholders.

The regulations would require banks and other financial institutions get approval from the BMA before launching mutual funds or making a share offering.

BMA general manager Mr. Malcolm Williams said yesterday that Authority officials have been talking to the issuers of local mutual funds about whether or not they see it in their best interest to be more regulated.

The two local mutual funds, The Bermuda Rock Fund and the Buttress Bermuda Dollar Fund were not required to consult with the Authority, although they did advise the BMA in advance of their launches.

But Mr. Williams said he believed there should be some supervision of funds launched by financial entities for the public -- including preference redeemable shares, bonds or stock in a new company.

In the case of a mutual fund, for example, they should be required to seek permission, he said. That would be "in the public's interest, at least when the fund is over a certain amount and is drawing on public money''.

"There's got to be a check to ensure that it is in the public interest. The sooner we get some orderliness to it all, the better.

"The time has come for us to exercise that legal right we have to regulate financial instruments. We put some draft regulations forward some months ago that would allow the BMA to exercise that right to carry out its function of regulating financial instruments. It will be considered by the Government.

"It would also be good for these institutions. It would show the international community that we are acting responsibly with internationally accepted standards.'' Currently financial institutions volunteer information to the BMA and Mr.

Williams said he felt that they were acting responsibly. He said he was meeting with the principals of the mutual funds to find out if it would be beneficial to have some more direct regulation.

"And they want it,'' he said. "Again, it is something that they can sell internationally.'' With supervision of the stock exchange and new trust companies, more involvement in financial services, Bermuda's version of a central bank may eventually have to hire more people. But they have been shuffling staff, through retraining, away from exchange control issues to other areas.

"We're not out to have a plethora of regulations and a plethora of legislation,'' he said.

"We should be acting as a supervisor, not a regulator. The legislation should be the regulator. We have the powers to regulate, inspect and supervise financial institutions. But we haven't exercised our regulatory and inspection powers.

There has been much discussion of the Authority as a central bank, and Mr.

Williams says that the powers of a central bank already exists.

"We haven't needed to exercise all the powers. But the 1969 Bermuda Monetary Authority was a well written document. I have to applaud the Government. It is wide ranging. And, we have been able to work with financial institutions for the common good.

"For example, trust companies are now discussing forming an associa tion. We suggested that as a way that they can speak to us with one voice.'' Mr. Malcolm Williams.